Insurers As Investors
Property/casualty (P/C) and life/annuity insurers are key players in capital markets. They provide businesses with capital for research, expansions and other ventures through their investments in corporate equities and bonds.
P/C and life/annuity insurer investments differ according to their payout needs. P/C insurers invest largely in high-quality liquid securities which can be sold quickly to pay claims resulting from a major hurricane, earthquake or man-made disaster such as a terrorist attack. Life/annuity insurers’ benefit payments are more predictable, because life insurance policies and annuity contracts are much longer-term products. Life/annuity insurers invest more heavily in longer-term products.
Insurance companies also invest the premiums they collect in state and local municipal bonds, helping to fund the building of roads, schools and other public projects.